Netflix shares hit record on outlook for subscribers, profit

Netflix shares rose to a record high after Goldman Sachs Group recommended the stock, saying profit margins will expand as the company signs up new customers.

Los Gatos-based Netflix jumped 7.4 percent to $473.10 at the close in New York, exceeding the old closing high of $454.98 sent March 4. Shares of the Web-based film and TV service have gained 29 percent this year.

The potential audience will more than double to 207 million subscribers in the next three years with six new markets in 2014 and two to four annually after, Heath Terry, the Goldman analyst, said in a note. He said international subscribers may rise almost fivefold by 2017 and raised his 12-month price target on the stock to $590 from $380.

"Netflix could reach 62 million international subs by 2017, driving over 20 percent margins in that business, even as the company continues to invest," Terry wrote.

Netflix finished the first quarter with 48.4 million streaming customers, including 35.7 million in the U.S. and 12.7 million international, according to the company.

Billionaire Carl Icahn, the company's largest individual shareholder with 2.24 million shares, registered a paper profit of about $73 million with Tuesday's jump. His stake is worth $1.06 billion, based on his reported holding of a 3.7 percent stake as of March 31.